Ch 2 Deck 5 Flashcards
The issuer issues 15% more shares at the firm commitment price that the underwriter can use to cover its overallotment sale
Green shoe option
Green shoe option is also called
overallotment option
The green shoe option keeps the underwriter from having to
purchase higher priced shares at the market price and covering at a loss
The green shoe option is contained in
the underwriting agreement
If the underwriter does need to cover its short position at a loss
the underwriters share the loss among them pro-rata
Option 1/2 for qualifying as a WKSI is a worldwide
public float (not held by affiliates) of $700M in common equity
Option 2/2 for qualifying as a WKSI is having non-convertible debt
in the amount of $1B in the past 3 years
WKSI’s can file FWP’s in
the pre-filing period
WKSI’s can file registration statements on
the much abbreviated S-3 form
WKSI’s can file automatic
shelf registration statements
Automatic shelf registrations become effective
immediately upon filing
Shelf registrations allow unlimited shares for a period of
up to 3 years
Is SEC review required for shelf registrations?
No
WKSI
Well-known seasoned issuer
Two options for qualifying as a seasoned issuer
Public float of $75M
OR
Listed on a national securities exchange
Seasoned issuers can file
Abbreviated S-3 forms
Unseasoned reporting issuers have public float
Public float under $75M
Unseasoned reporting issuers file registrations with
S-1
Issuers judged as ineligible by the SEC
Ineligible Issuer
Reasons for being judged an ineligible issuer
–Not current in their reports
–Shell companies
–Penny stock issuers
–Issuers that have violations
registration form for follow-on offerings involving WKSI and Seasoned Issuers
S-3
Registration form for IPOs
S-1
Registration form for issuers other than WKSI and Seasoned Issuers
S-1
Registration statement for mergers (also called business combinations)
S-4
Registration statement for Employee Stock Purchase plans
S-8
Registration statement for real estate investment companies
S-11
Affliates are
officers directors, those who own at least 10% of the company
public float is
securities not held by affiliates
non reporting issuers are those
not required to file reports under exchange act, meaning they have never yet issued securities. This issue will be an IPO.
non reporting issuers file with an
s-1
Ineligible issuers are unable to take advantage of
relaxed communications rules (forward looking statements in research reports)
S-3 is always for
follow on offerings
Business combinations must be registered because
purchases are made with shares, requiring the issuing of new shares
